A CONDENSED HISTORY OF THE WORLD

The economic history of the United States over the last 60 years – our rise to the wealthiest and most powerful economy in recorded history and long, slow lurch into insolvency and economic balkanization among the population – is a direct result of the Boeing B-29 Superfortress.

Allow me to explain.


Not pictured: subprime lending

In the conduct of the Second World War, technological advances in aircraft allowed air forces to develop the techniques of strategic bombing. For most of the War, the Allies' ability to turn Axis nations into powder and rubble was constrained by the range and capacity of the existing bomber aircraft (primarily the B-17 and the British Lancaster). In other words, in 1943 it took an unreasonable number of aircraft, each with a small bomb load, to reach Germany and drop a worthwhile number of bombs on a target. In the Pacific, well, our bombers simply didn't have the range to reach Japan at all. When the B-29 came along, everything changed. With tremendous range and payload it could travel exceptional distances and, more importantly, rain a fuckload of large explosives on German and Japanese soil. We're not talking about the modern laser guided bomb that can be fired down a chimney. This is pre-computer era heavy bombing – if you want to drop a bomb on an oil refinery you drop 700 bombs and figure one will hit it.

It's incorrect to say that the B-29 won or turned the tide of the War. It didn't. But it brought the War to a more rapid end…and it did that by turning Germany and Japan, civilian and military targets alike, into smoking piles of gravel. We bombed the living shit out of them as fast as we could build B-29s and bomb casings. Eventually, as the military term goes, we "broke the enemy's will to fight." Daily firebomb raids on Tokyo will do that. Now consider the fact that the German military had already done unspeakable damage to the Soviet Union, Britain, Poland, Greece, Eastern Europe, and France earlier in the War. After we sent Germany and Japan back to the Stone Age, consider the economic standing of the United States at the end of 1945.

There was one industrialized nation in the world that was not in ruins, and we were it. Throughout the War our enormous production capacity and economy were able to arm the world – Britain, Soviet Union, France, Poland, and ourselves. Then we pulled a neat trick; after we had used that enormous capacity to help the world destroy itself, we immediately transformed our ecomony into a means of rebuilding it. Only the US had the ability and means to churn out the cars, the steel, the machinery, the resources, and everything else Japan, Britain, and continental Europe needed rebuild itself.

This is why the 1950s were our economic high water mark. People without educations could not only get manufacturing work, they could get highly-paid manufacturing work. Employers grumbled about Unions but, hey, everyone was making so goddamn much money that they forked over the salaries that made the middle class with relative good humor. The post-War generation and its prodigious number of Boomer children established a level of prosperity that working people had never before experienced. Then things got complicated.

By the late 1960s Europe and Japan had largely rebuilt. They started cranking out their own manufactured goods to compete with American ones. We could no longer name our price or our wage. We lost our position as the only functioning manufacturing economy on the planet. The unparalleled prosperity of the American middle class came to an end and employers started fighting back, cutting costs, outsourcing, and all of the other harbingers of economic doom that became prevalent in the 1970s.

Then Reagan came along and reminded Americans how much better everything had been in the 1950s, reminding the Boomers that they had earned at least the standard of living that their parents had achieved if not better. One problem – real wages were not increasing. They peaked in the early 70s and have stagnated or declined since. In order to let Americans afford the lifestyle that Reaganism was selling we had to get a little creative.

We repeatedly cut taxes, which made people feel like their earnings increased. We gave people a convenient list of scapegoats (the short version: black people) to blame for our fading prosperity. And most importantly, we began expanding credit. We emphasized consumerism as a combination of a birthright and a civic duty but we were no longer giving people the large middle class wages the WWII generation enjoyed. So we had to fudge it. If you want Joe to keep shopping while you cut his wages, you give him a Mastercard. Or, you know, four.

The 1990s brought two developments: the explicit removal of economic borders with NAFTA and the brief fantasy that the stock market was magically going to make us all millionaires. With intense competition from cheap Asian and South American goods, only the law was preventing many American manufacturers from relocating overseas. NAFTA was the final act of selling the American blue collar worker down the river. Bad turned into worse because not only were real wages falling, which had already been the case for 20 years, but the jobs disappeared altogether. By the end of the decade, at which point we realized that the NASDAQ was not in fact going to make us all rich, the smoke-and-mirrors required to delude the middle class into thinking they could afford the American Dream became overwhelming. To keep people buying homes, cars, vacations, and shopping binges they couldn't afford there remained only one solution: abandon all lending standards and start loaning money like drunken sailors.

The alternative, of course, was letting people realize and get angry about the fact that they couldn't afford a house, a car, copious consumer goods, and all those other things their folks enjoyed.

Then the financial industry had the bright idea to make investment instruments out of their bad lending decisions, theorizing that if shitty assets were packaged together they somehow became value-packed financial assets. This part and what happened next is already familiar to you. We all discovered that A) mortgage-backed securities are a bad idea since banks can make more mortgages on demand and B) a credit House of Cards only stays upright as long as debtors can minimally service their debt. When mass prosperity falls to the point at which people can't even make minimum payments, well…that's the endgame.

This isn't in my usual style; I'm too exhausted after a 48-hour interview (in Texas; rural Texas) to cite, link, and otherwise provide the kind of evidence that I think good arguments need. Nonetheless I wanted to express my dissatisfaction with the common wisdom about the important economic events in the post-War era (the Arab Oil Embargo, the end of the Cold War, supply side economics, the dot-com bubble, etc). Fuck all of that. The economic history of the past sixty years is the story of B-29, the instrument with which we flattened whatever parts of the industrialized world Imperial Japan and Nazi Germany had left standing. Subprime mortgages are no more explanatory of our current problems than that first, fateful meeting between Curtis LeMay and Robert McNamara when they looked at the B-29 and said "Hey, I know what we could do! Let's get these things in the air 24-7, and…."

Six decades later, here we are.

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21 Responses to “A CONDENSED HISTORY OF THE WORLD”

  1. The Barefoot Bum Says:

    By the late 1960s Europe and Japan had largely rebuilt. They started cranking out their own manufactured goods to compete with American ones. We could no longer name our price or our wage.

    Increasing production made us poorer: the central contradiction of capitalism.

  2. comrade x Says:

    Exactly right. The enormous growth of the American economy occurred due to the fact the the competition did us the favor of tearing each other to shreds in two world wars. The B- 29 finished off the only one left isolated geographically- Japan.
    The " genius" of American capitalism had nothing to do with it.

  3. FMguru Says:

    Excellent point, well made.

    I'd say there was one other factor in making the 20th Century "The American Century": the opening of The West. While the European great powers were getting involved in massively destructive wars over the ownership of border provinces and pouring resources into overseas colonies that they were going to lose anyway, the US was able to concentrate on exploiting the fuck out of half a continent of untouched natural resources (well, once the pesky stone-age aboriginals were packed off to miserable reservations to die).

    Think of it. Europeans tearing each other apart to shift their borders a couple hundred miles and genociding one another to make "living room", while the US is developing seemingly unlimited deposits of silver and gold and iron and uranium and oil and natural gas and hydropower and timber. While Europeans died fighting over fields that had been under constant cultivation since the Roman Empire, the US was bringing tens of thousands of square miles of new cropland online, irrigated with mighty rivers and aquifers which had been filling up since the age of the dinosaurs. Huge swaths of land just waiting for someone to build houses and cities and freeways and shopping malls and fill them up with hundreds of millions of immigrants and newborn babies.

    The ascension of the US to the rank of global hyperpower was the product of two developments: the complete obliteration of the economies of all possible competitors in 1945 (and, to a lesser extent, 1918), aided by our continental isolation, and the bringing online of enormous, seemingly-unlimited quantites of land and natural resources throughout the century.

    Of course, just as the world economy eventually recovered and retooled, the West is now tapped out, depleted, fully developed. We've hit the limits as to what we can extract from our continent, only no one wants to admit it. The water is all partitioned out, the aquifers are emptying, the forests are dying, the oil fields are running dry, the soil is eroding away, the cities are choking on their own sprawl. The era of infinite abundance, which has been a part of the American Experience since time out of mind, came to an end a long time ago, and it's time we started dealing with it.

  4. Michael Says:

    This was presented to me in B-school as an explanation why US auto manufacturers were focused on getting the shit out the door while Japanese and German auto manufacturers focused on delivering quality, reliable, cars.

    On one of your earlier posts on Atlas Shrugged, a bunch of commenters remarked on Europe's "shitty quality of life." I think that perception is a result of what you refer to as "consumerism as a combination of a birthright and a civic duty." I think you wrote a post once about how the boomers were taught that the worst part of the Soviet Union was stores with empty shelves! We can shop! We buy things! Our wardrobe, housewares, appliances, cars, and shit – even our houses are disposable and need to be replaced every year!

    Anyway, I'm kind of rambling… another great post.

  5. DrBubbles Says:

    A question and a comment:

    My question is, What is your source for B-29s being deployed in the European theater of operations? Because my understanding was that they weren't. I'm just curious; it doesn't really affect your argument — how they bombed Europe back to the 1700s doesn't change the fact that they did.

    My comment is that the U.S.'s financing of WW2 primed the U.S. population for its postwar explosion of consumerism. For four years there was an enormous increase in payroll, nothing to buy, and an extremely popular savings/investment program (War bonds). That gave people a lot of postwar money which made for a lot of postwar leverage.

  6. Will Says:

    "We can shop! We buy things! Our wardrobe, housewares, appliances, cars, and shit "

    Americans express their creativity through shopping. Other cultures have ritual and ceremony; we have "black friday" and deep, deep discounts.

  7. odnamrA Says:

    Give the man an internet.

  8. Michael Says:

    You are what you buy.

  9. comrade x Says:

    Bubbles is right. Most of the damage done to the German cities was done by the British – they came up with the technique of frying civilians in vast numbers and LeMay perfected it on March 10, 1945 with the fire bombing of Tokyo.
    The American B-17s and B- 24s did their bit in Europe by shifting the rubble around when they missed their strategic targets ( factories, infrastructure, fuel dumps, etc.) .
    Again, nothing to do with the argument, but historical nitpicking is usually irresistable.

  10. Matthew Says:

    Ah, of course! So the answer to our economic crisis is simple: foment another world war in a way that it won't be fought on our continent!

    And then all will be well. It shouldn't be too hard to get the Middle East going, and I bet that Asia could go nuts without too much work. If Russia is getting back to their old game, then maybe we could get Europe in on it, too.

    Maybe those neo-cons had the right idea all along.

  11. Ed Says:

    High five, Dr. Bubbles. You are correct. I typed this one under duress and from memory, not bothering to look anything up. It has come back to bite me in the ass. We reduced Germany to rubble by other means.

  12. Hudson Says:

    Wow. And to think that all this time it was about the limitless supply of cheap, abundant oil Cheetos.

  13. jre Says:

    A (relatively minor) correction, if I may. You say:

    [R]eal wages were not increasing. They peaked in the early 70s and have stagnated or declined since.

    This is not strictly true. Real incomes for the lower and middle classes did rise in the 1990s, after declining since the 1970s. It was news at the time — one of the Clinton administration's most notable economic achievements. Nate Silver has an excellent retrospective.

  14. Cassie Says:

    Ohhh, were you in Lubbock? I hear Lubbock is a shit hole.

  15. Mike Says:

    Thomas Geoghegan has an article in Harpers and elsewhere talking about how we can trace this strand back to 1978, when "Marquette National Bank v. First of Omaha Service Corp." tossed the usury laws off the books.

    http://www.democracynow.org/2009/3/24/thomas_geoghegan_on_infinite_debt_how

    I haven't put that leg into my thinking about this – but of course!

  16. Dingus McGee Says:

    FMGuru said:

    The era of infinite abundance, which has been a part of the American Experience since time out of mind, came to an end a long time ago, and it’s time we started dealing with it.

    QFT. That's been the problem with humanity for the past million years. No matter where we go we went, we left death and destruction in our path. Only thing that kept us from dying out was that the world was a big place back then and we were few. No with over 6 billion people on the planet and all known land masses mapped and inhabited (and no aboriginal people left to evict) I see two things happening 1) mass starvation in the next 50 years as the world's population approaches 10 billion or 2) a bloody, bloody war which results in our "competitors" getting blasted back to the stone age.

    I'm guessing neo-cons are hoping for #2.

  17. Dingus McGee Says:

    In a similar vein:

    The alternative, of course, was letting people realize and get angry about the fact that they couldn’t afford a house, a car, copious consumer goods, and all those other things their folks enjoyed.

    My folks are still wondering why I still don't own a house at 33 years old. They seem to think that the only way I can prove I'm truly independent is to be a sucker and buy a house from a market that (still!) is massively overpriced.

    I guess the baby boomers are just as clueless as their parents.

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